In my last colum in La Presse, I wrote that we were doomed if the provincial government was applying the same approach to the debt than to the health care crisis. Fortunately, I was wrong to expect the Charest's government to adop the same methods. The Fonds des générations announced in the Audet's budget is a minor but promising innovation in the Quebec's public policies. For the first time, Quebec's government stops to be symbolic on the debt crisis and start a proactive approach of the problem. Those who denounce the Fonds des générations, saying that during its first year, teh government will contribute 74 millions $ while the debt is incresing by 3 billions are wrong. They forgot that the Caisse de dépôt et de placement, on of the most important Quebec's financial institution, started by a relatively small contribution to grow steadily. Clearly, the Fonds des générations is promised to a brilliant future... if politicians do not denature it!

2 comments:

Good point. But the fact is, central Canada (i.e. Quebec and Ontario) is the only region in the country where massive debts are being run. Even Newfoundland and Labrador reported a giant surplus as a have not province.

At this point, there is no doubt that Harper's administration must address the fiscal imbalance, especially since the country is tilted with all the wealth in Alberta.

I'm not too sure about how do you consider Harper's administration should deal with the so-called fiscal imbalance.

First, many economists doubt of the real existence of a fiscal imbalance in Canada.

Then, if Quebec and Ontario are running large deficits, it might be because they lived over their capabilities for so long. I do not consider other provinces should pay for irresponsible governments in Ontario and Quebec.

What I would suggest in order to deal with that problem is to let some fiscal field for the provinces which need it. For example, the federal government could lower the GST and income taxes while provinces which want to generate more revenues to fight debt and deficits could raise new taxes.

This way, the well administred provinces might let their citizens benefit from the federal tax relief and Quebec's and Ontario's government would have to explain where their revenues are spent to legitimate a new tax raise. That would be the most transparent and equitable measure I can think about at the moment...